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Developments in the New Zealand banking industry since 2003

Ken Matthews

This article reviews developments in the New Zealand banking industry over the year ended 31 December 2003. It describes structural changes in the industry, comments on current issues in the area of banking supervision in New Zealand, and examines trends in payment methods and distribution channels. The article analyses banking system data from 2003, looking at aggregate financial position, financial performance and risk indicators. The data indicate that the banking system continues to display considerable stability, with good profitability and asset quality. Some comments on developments in the non-bank financial sector and the Australian banking sector are also included. Concluding remarks are made about areas of potential vulnerability for the New Zealand banking system. This is the final article on the state of the banking system to appear in the Bulletin for the foreseeable future. Commencing later this year, the Reserve Bank plans to publish a regular report, probably six monthly, on the New Zealand financial system. That publication will include analysis of the state of the banking system and related issues. The Bulletin will continue to include articles discussing specific policy developments in the financial system.